Category: Policy & Business

Planning Guidance Updated

There may be greater opportunities for landowners to develop farmland as a result of new Government Guidance.  An updated National Planning Policy Framework (NPPF) for England was published at the end of July.  This sets out the Government’s planning policies for England and how these are expected to be applied.  It replaces the previous 2012 NPPF.  The overall thrust of the document is to see more homes built.  For example, local Councils will have a new ‘Housing Delivery Test’ which will monitor the actual number of dwellings built rather than the number being planned.  There is to be a relaxation of the rules on building new dwellings where there is an essential need for farm workers, and converting existing houses in the countryside into multiple dwellings.  The rules on converting farm buildings into homes (Class Q) consolidates the easing of restrictions introduced over the last few years.  ‘Rural Exception Sites’ allow landowners to develop affordable housing in rural locations that otherwise would not get planning permission.  However, proposals to allow a proportion of market-value development on these sites to cross-subsidise the affordable units has not been included in the final document to the disappointment of campaigners.  The NPPF can be found at – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/728643/Revised_NPPF_2018.pdf

 

Northern Ireland Farm Policy

Northern Ireland has joined the other UK administrations and published a consultation on future farm policy.  The consultation runs until the 10th October and can be found at – https://www.daera-ni.gov.uk/consultations/northern-ireland-future-agricultural-policy-framework

Results Based Environmental Scheme Funded

An alternative approach to paying for agri-environmental work is to receive extra Government funding.  The Payment By Results (PBR) pilot scheme has been running in two areas in East Anglia and North Yorkshire since 2016.  This rewards land managers for the results they achieve in terms of biodiversity etc. rather than following set prescriptions.  Agreement holders can choose the most suitable method to achieve the agreed end result.  The pilot had been funded by the EU as part of a wider pan-European study.  Defra has now announced it will provide £540,000 to keep the programme going for a two further years.  Such payment-by-results approaches could well form an important part of the New Environment Land Management Scheme that will be introduced after Brexit.  Although it seems sensible to pay on the basis of outcomes rather than processes there are issues with the approach.  For example, external factors (e.g. the weather) can mean that the intended results are not achieved despite the best efforts of the land manager.  There are also issues around measuring the outcomes (far harder than looking at actions taken).  This means there is a need to pilot and test such approaches. 

FIT Closure Planned

The Government is planning to end support for small-scale renewable electricity projects.  A consultation on the future of the Feed-in Tariff (FIT) scheme published by the Government suggests that the scheme will be closed to new applications from the 31st March 2019.  The consultation can be found at – https://www.gov.uk/government/consultations/feed-in-tariffs-scheme.  Current the FIT systems supports technologies such as wind, solar, hydro and AD under 5MW.

 

EU GM Blow

The application of new breeding techniques in Europe is likely to be more difficult following a ruling by the European Court of Justice (ECJ).  The Court ruled that organisms created by mutagenesis techniques should be classed as Genetically Modified Organisms and therefore should be subject to the same rules as ‘traditional’ GMOs.  This creates a very high regulatory hurdle and means that plants and animals derived in this way are much less likely to appear in commercial agriculture.  Most GMOs to date have been ‘transgenic’ – meaning that DNA from a different species has been inserted.  Mutagenic techniques work directly on altering the organism’s DNA without importing foreign genes.  An example is gene editing where a specific DNA sequence is replaced by a modified one.  Thus it is possible to ‘switch’ on and off various traits in the organism.  The proponents of the technology argued that, as the techniques were essentially just a more refined version of traditional breeding techniques (where changes in the genome are created randomly), the existing GMO rules should not apply.  However the ECJ agreed with Green campaigners that plants and animals created in this way should be treated as GMOs.

DEFRA Guidance

The hot, dry weather is causing difficulties for some to meet scheme requirements; DEFRA has released guidance for those affected.

Catch Crops – claimants who have declared Catch Crops to satisfy their EFA requirement under the BPS , should take all reasonable steps to establish the crop by 20th August deadline and keep the evidence – i.e. seed labels and a farm plan.  It is not necessary to tell RPA in advance if you cannot establish a crop.  If an inspection takes place and a catch crop has not been established, inspectors will consider using alternative EFA features (compensatory EFA) such as hedges or field margins.  This has always been allowed under the rules, see page 39 of the BPS Guidance.  But this year, in addition, if claimants do not have enough alternative EFA features, inspectors will need to see evidence that all reasonable steps have been taken to establish the Catch Crop, this will also be required to make a case for ‘force majeure’.  DEFRA has said that inspectors will go on a case-by-case basis and will let claimants know if they have to take any further action, such as a force majeure claim.

Wild Fires – where claimants have been affected by wild fires they may be having difficulties meeting requirements for a number of schemes.  The following guidance has been given by DEFRA.  Land that has been affected by wild fires will remain eligible for BPS; the land is classed as agricultural even though there is no green cover.  Land that previously wasn’t eligible, due to scrub and bracken, may now actually be eligible if this has been cleared by the fire.  If this is the case an RLE1 would need to be sent to RPA to remap the land.  This would only be available for 2019 onward, as the the 2018 deadline has passed.  Wild fires will not be a breach of cross compliance unless, it was a result of intentional or negligent action by the claimant.

Where wild fires or exceptional drought have affected land covered by a Countryside Stewardship (CS) or Environmental Stewardship (ES) Agreement, contract holders should contact Countryside Stewardship Delivery Service CSDS (https://www.gov.uk/government/collections/countryside-stewardship-get-paid-for-environmental-land-management) as soon as possible; they will be able to give agreement holders advice on what to do depending on the severity of the wild fires.  If the damage is only likely to affect the current year, agreement holders can apply for a derogation under ES or a minor or temporary adjustment (MTA) under CS using the relevant form.  Where the damage is likely to affect more than the current year and will need a change to the agreement, this may be considered as force majeure.  Agreement holders must notify Natural England (NE) within 15 days in writing if such an event prevents them from carrying out their agreement requirements. Once NE has received a derogation, MTA or force majeure application, it will advise agreement holders on their next steps and any impact on their current claim.

Where woodland has been affected, agreement holders should contact the Forestry Commission with 10 days if the woodland has been  granted under the Farm Woodland Premium Scheme (FWPS) or the Woodland Grant Scheme (WGS) or 15 days if under the Farm Woodland Premium under the English Woodland Grant Scheme.

RPA Performance

The Government has responded to the Environment, Food and Rural Affairs (EFRA) Committee’s report and recommendations on the performance of the Rural Payments Agency (see article of 21st May).  On the recommendation that the RPA should set more stretching targets, the Government has said that the RPA is committed to reducing the length of time it takes to process payments, learning lessons from BPS 2017, which has seen mapping work already undertaken before the 2018 scheme year opened for applications, which should reduce the processing time for 2018 applications.  But the Government has stopped short of saying it will implement EFRA’s recommendation of setting a target of 98% of payments by the end of December.  The Government’s responses to other EFRA recommendations include:

  • EFRA’s recommendation that RPA develop a system to allow online mapping changes – The Government will remain with the established paper method (RLE1) given the time and investment it would take to implement a new online system, when we will be moving to a new domestic agricultural policy after Brexit.  The RPA tried to implement a system back in 2015, but it failed and the whole application system had to revert back to paper for the year.
  • The RPA publishing key performance indicators for mapping accuracy and resolution of times for mapping errors by 2018 – The  Government has said the RPA will not be publishing key performance indicators surrounding mapping.  It states, it has met all its performance targets over the last couple of years.  For 2018, the RPA plans to introduce improved customer communications regarding mapping and changes to mapping guidelines and guidance.
  • Setting out a clear strategy detailing how improvements to communications and customer services will be implemented.  This should include changing the helpline so claimants have a single point of contact with the RPA (i.e. a dedicated Case Worker) – According to the Government, the RPA has introduced ‘specific contacts’ who will update customers on progress and ‘resolution teams’ to respond to difficulties as they arise and more informative timely communication for those waiting on their payment.  It appears there will be no dedicated Case Workers.  One of the most frustrating elements is trying to resolve a payment query, with lack of information in generic letters, to be able to work out where or why a payment maybe wrong and not being able to ‘work’ through a problem with one person. 

The Government has also responded to the report, by saying DEFRA is implementing a range of measures to improve the uptake, processing time and payment performance for the CSS and the previous ES.  DEFRA will also ensure that the RPA is resourced to take over the administration of these schemes in autumn 2018 with people and funding being transferred from Natural England.  Looking to future policy, the Government has said the RPA is involved in key discussions and it has ’embedded’ a number of RPA staff into the policy and planning teams, so future farm policy can benefit from their experience.

EU Funding Until 2020

The Treasury has confirmed that any funding secured through EU Programmes, until the end of 2020, will be guaranteed by the UK Government even if we end up leaving the EU without a ‘deal’ in March 2019.  This would suggest that Rural Development funding is guaranteed.  Our article in March reported on the agreement of a Transition Period (or ‘Implementation Period’ as the UK Government calls it), which would last until 31st December 2020, during which time the UK follows all EU rules and continues to receive EU Funding.  There was a specific opt out for the BPS for 2020, but as we understood it, market support and the Rural Development Regulations would still apply in 2020.  However, as previously written, whilst it is still more likely that there will be a negotiated settlement, if there is a ‘No Deal’ come next March, this would mean no Transition Period.  This announcement by the Treasury means any funding secured through EU Programmes, which would suggest Rural Development schemes, from now until the end of 2020, will be fully funded by the UK Government.

Cuadrilla Gets Fracking Greenlight

Cuadrilla Bowland Ltd has been given the go ahead to begin fracking.  The Energy and Clean Growth Minister, Claire Perry, has granted Hydraulic Fracturing consent for the shale gas operator, to drill shale rock at its Preston New Road site in Lancashire, subject to certain ‘financial health’ conditions being met.

Brexit Update

In what is becoming a familiar trend, the Brexit process is becoming increasingly turbulent with civil war in the Conservative party and the stakes being raised in negotiations with Brussels over the prospect of a ‘No Deal’ Brexit.

The publication of the Chequers White Paper changed the dynamic with Brussels insofar as there was finally a detailed paper on the table which the EU could negotiate on.  However, the sands have shifted in Westminster yet again following last week’s Commons debate on the Customs Bill.  Four key amendments were tabled by Conservative Brexiteers which are seen by some as an attempt to undermine the Chequers White Paper:

  1. Customs Duties’ Collection – bans the UK Government from implementing its plan to collect EU customs duties after Brexit unless the EU agrees to collect tariffs on behalf of the UK. The EU has already made it clear that it would oppose such an arrangement, something which is already conceded by the UK Government in its White Paper.
  2. New Customs Union with the EU – prevents the UK from entering into a post-Brexit customs union with the EU, without introducing a specific new piece of (primary) legislation.
  3. VAT regime – requires the UK to operate a separate regime to the EU.
  4. Northern Ireland – makes it illegal to have a customs border within the UK, thus seeking to rule out a hard border on the Irish Sea between NI and GB.  The Prime Minister has already made this commitment, as the UK Government’s opposition to the EU’s proposed backstop is well known. Notably, this amendment did not preclude a regulatory border as Northern Ireland already operates within a separate epidemiological area to the rest of the UK.

Of the four amendments, those relating to customs duties and VAT are the most problematic.  On customs, Downing Street is maintaining that the approach is consistent with its White Paper because it envisages that money from tariffs will flow both ways.  However, the White Paper has not provided much detail on how this would work aside from a vague reference to using a formula to govern flows of money based on trade patterns between the UK and the EU-27.

The situation regarding VAT is potentially more serious as it withdraws the UK from the EU’s VAT administrative system.  This could mean that authorities would have to impose a hard border to check if the proper tax has been applied to goods crossing the border.  This will be most problematic on the island of Ireland where there is a 500 kilometre land border.  If the UK chose not to impose a hard border, it would be exposed to massive fraud (smuggling) and tax evasion.  One possible way to negate this is for the Government to seek agreement from the EU to UK participation in its VAT information sharing arrangements, which would need new parliamentary legislation and would add further complexity, particularly because the EU would likely insist on ECJ oversight.

Although the four amendments complicate an already fraught position for the UK, the reality is that the Chequers White Paper is more of an opening gambit in the negotiations with Brussels.  What is crucial for the UK now is to increase the pace of the negotiations with Brussels and to pay attention to the sequencing which it has already agreed.  This requires the UK and the EU to firstly agree a Withdrawal Agreement, a legally binding treaty, which will include a backstop on Ireland.  This will also be accompanied by a Political Declaration setting out the future direction of the UK-EU relationship.  The details underpinning the future relationship would then be negotiated and agreed during the transition period.  Undoubtedly, the UK-EU negotiations are going to require further compromises.  If the terms of the negotiated deal go against existing domestic UK legislation, then the British Government will simply have to change the legislation.  So, in other words, the four amendments and key elements of the Chequers White Paper could be overturned at a later juncture if required.

That said, as the stakes get higher in the negotiations, the chances of a No Deal (whilst still less likely than a negotiated settlement) increase.  It is prudent that agri-food businesses start seriously planning for the prospect of No Deal.  At the business level, steps to consider include:

  • Contingency stocks – there is increasing evidence that businesses are starting to build contingency stocks to smooth over extra delays which could result from border checks being re-imposed.
  • Training – boost efforts to train-up staff on customs and official controls issues and procedures which must be followed if the UK is trading with the EU as a third country under WTO trading conditions.  Some of this knowledge is likely to be useful anyway once the eventual UK-EU trading relationship is finalised and will be applicable for businesses seeking to expand markets beyond the EU.
  • Licensing – ensure that UK businesses have undertaken the steps necessary to ensure that they can continue to export to the EU-27.  This could include providing proof of previous trade with EU Member States.
  • Mitigating tariffs – most businesses by now should know what the default EU Common External Tariffs are for the products they supply into the EU.  What is perhaps less well-known are the Tariff Rate Quota (TRQ) options potentially available to mitigate the impact of tariffs.  It should be noted that the TRQs available to the UK are limited and British businesses would be competing with other countries for access.
  • Managing cash flow – if UK businesses need to start lodging securities (e.g. licensing securities) with EU-27 authorities as well as potentially paying VAT on cross-border consignments, then cash flow will have to be carefully managed, particularly if goods are delayed in transit and payments by customers get delayed.

For policy-makers, actions to consider to help businesses would include:

  • Recruiting additional customs and border control staff – the UK Government has already started this process but faces competition from the likes of the Netherlands and Ireland which are increasing their recruiting efforts significantly.  In addition to customs staff, the need for veterinary staff is evident.  Incentives to encourage veterinarians working in small animal veterinary practices to assist with implementing official controls should be considered, even if they work on a part-time basis.  As in parts of the US, programmes to part-subsidise tuition fees for veterinary students if they commit to a period (e.g. 5 years) of working on border controls or associated duties in meat plants should also be examined.
  • UK-EU TRQs – given that the close historic trading links between the UK and the EU, a case should be made to the WTO to introduce new UK-EU TRQs that would reflect the historical trading patterns between both parties in the event of a No Deal.  Whilst this would not eliminate friction, it would go a long way in addressing tariff-related issues that could arise whilst simultaneously protecting farming livelihoods.  Admittedly, there may be some opposition within the WTO on this, but it is worth pursuing given the potentially exceptional circumstances of a No Deal Brexit.
  • Official controls and associated checks – given that UK and EU standards would essentially be the same on Day 1 of Brexit, there are grounds for UK exports having a lower frequency of physical checks for products of animal origin (e.g. 1% for sheep meat) than the EU’s default rates (20% for sheep meat).  Currently, New Zealand enjoys a 1% physical check rate given its closeness to EU standards, so there is a precedent.  This would work in both directions UK-EU and EU-UK as long as standards didn’t diverge and would help to lower the regulatory burden considerably.  This arrangement could also include reciprocal recognition of existing UK (and EU) licenses and authorisations so that existing trading patterns could continue and upheaval is lowered as much as possible.
  • EU-27 employees – grant all existing EU-27 citizens and residents in the UK something akin to settled status.  This will require clear and rapid communication to them, to their employers and their landlords to clarify their rights and obligations.  This would at least give businesses some degree of certainty that existing employees could continue to work in the UK whilst giving workers and their families the peace of mind they require to continue to be productive.

It is worth emphasising that the likelihood of a No Deal scenario is still relatively low and that an extension of the Article 50 process (of around 3-4 months) is deemed by experts in Brussels and elsewhere as being more probable if a negotiated deal was not reached in the time available.  However, as an industry which has been through many crises in the past, it is always prudent to prepare for the worst case scenario whilst striving for the best outcome possible.